Deutsche Bank slides after layoffs begin as part of its $8.3 billion restructuring plan
- Shares of Deutsche Bank declined more than 4% Monday as a round of global layoffs at the firm began.
- The bank recently announced a major restructuring that will involve winding down its equities business, eliminating 18,000 jobs by 2022.
- The restructuring plan comes after the bank's proposed merger with Commerzbank fell through. It's goal is to streamline the bank and boost profitability.
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Shares of Deutsche Bank declined more than 4% on Monday following the announcement over the weekend that the bank would undergo a massive restructuring program.
The focal point of the restructuring is the firm's exit from the global equities sales-and-trading business. The entire process is expected to result in 18,000 layoffs by 2022. That means that more than 1 in 6 workers at the bank will be out of a job in the next few years.
The layoffs began in Asia, where Deutsche Bank cut about half of its equities staff, according to a Bloomberg report. The group has plans to reduce headcount there by another 25% within a month.
Layoffs continued at Deutsche Bank's London office on Monday. Employees being let go were reportedly told that they had until 11 am to pack their things, and that their badges would stop working in a few hours.
The $8.3 billion restructuring - the largest in the bank's history - involves shrinking its investment bank, overall global presence, and fixed-income business.
It comes after years of trying to compete with investment banks such as Goldman Sachs, JPMorgan, among others including German banks. In addition, Deutsche has struggled financially as interest rates plummeted in Europe. The bank failed three of the Federal Reserve's stress tests in the last five years and continues to face restrictions from US regulators due to compliance failures.
The first talk of cutbacks at the German bank came after the proposed merger with Commerzbank, a rival German bank, fell through. Christian Sewing, the CEO, said that the bank was prepared to make "tough cutbacks to improve the bank's profitability," as well as boost its share price, which sank 25% before the restructuring plan was announced.
There have been other issues at the bank as of late. It's being investigated by both the US and German authorities in connection to anti-money laundering regulations including its handling of transactions between Jared Kushner and Russians and suspected tax evasion, respectively. There have also been reports of low morale at the bank, with traders leaving early and actively searching for new jobs.
Shares of Deutsche Bank had risen 3% year-to-date through last week.
